SINGAPORE (Feb 8): DBS Group posted record quarterly earnings of $1.22 billion for the 4Q ended Dec, up 33% from a year ago.

This brings full-year 2017 earnings to a record $4.39 billion, 4% higher than last year.

In 4Q, total income rose 10% to $3.06 billion from a year ago, staying above the $3 billion mark for the second straight quarter, as net interest income rose 15% to cross the $2 billion mark for the first time.

Net interest margin rose seven basis points to 1.78% in line with higher Singapore-dollar interest rates. Loans, including those from the consolidation of ANZ, rose 11% in constant-currency terms.

Net fee income grew 23% to $636 million on year. The increase was across most fee income streams and led by wealth management and investment banking. Other non-interest income fell 26% to $322 million as weaker trading income was partially offset by an increase in net gain on investment securities.

Expenses increased 11% to $1.36 billion due to higher marketing and technology costs as well as the consolidation of ANZ. Profit before allowances rose 9% to $1.70 billion.

The NPL (non-performing loans) rate was unchanged from the previous quarter at 1.7%. Allowance coverage came in at 85% and at 173% when collateral was considered.

DBS says the recent finalisation of Basel capital reforms have a benign impact on DBS, enabling its capital requirements to be rationalised.

"In view of this, the board suspended the scrip dividend with immediate effect. It also determined that ordinary dividends can be sustained at higher levels and affirmed the policy of increasing them over time in line with earnings growth," says DBS.

For the final dividend of 2017, DBS is proposing a payout of 60 cents per share. This will bring full-year ordinary dividend to 93 cents per share, an increase of 55% over the previous year.

In addition, it has proposed a special dividend of 50 cents per share as a one-time return of the capital buffers that had been built up and to mark its 50th anniversary.

In a flash note, OCBC analyst Carmen Lee says, "DBS delivered a good set of FY17 results this morning. Net profit of $4,371 million was up 3% from the previous year, fairly in line with market and our expectations. The final quarter’s performance was led by an increase in wealth management and higher unit trust and other investment product sales. In addition, Investment Banking also saw a doubling in fees from higher equity market and fixed income activities."

As at 11.54am, shares in DBS are up 62 cents at $25.98.